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Finance Bill

It is a great pleasure to wind up this relatively brief Second Reading debate on behalf of the Opposition. I thank Members for their contributions. The hon. Member for Truro and St. Austell (Matthew Taylor) spoke for the Liberal Democrats, standing in for his colleagues. He made the fair point that only limited time was available for the debate, although if more time had been allowed I do not know whether we would have heard more contributions from his parliamentary colleagues; perhaps not. It was his final speech in the House, and he must be one of the youngest Members to retire after 23 years. On behalf of the whole House, I wish him, and in particular his eldest son, well in the future. I thank my right hon. Friend the Member for Wokingham (Mr. Redwood) for an excellent speech. He highlighted the need for professional advice and input for our deliberations on these highly technical matters. There have been only two working days since the publication of the Bill, so we have not had the opportunity to receive professional input as we would normally do. The hon. Member for Dundee, East (Stewart Hosie) raised the issue of fuel duty, and made a persuasive case for our fair fuel stabiliser policy, on which we are consulting. My hon. Friend the Member for Stone (Mr. Cash) argued that nothing in the Bill would assist small businesses, and that the real debt figure is considerably higher than the Government would admit to—a point that was also made by my right hon. Friend the Member for Wokingham, and has been made in the past by my hon. Friend the Member for Braintree (Mr. Newmark). I think that my hon. Friend the Member for Stone described them as the three musketeers. No Second Reading debate on any subject is complete without a contribution from my hon. Friend the Member for Broxbourne (Mr. Walker)—or perhaps I should call him my hon. and virile Friend, to use the terminology of our hon. Friend the Member for Macclesfield (Sir Nicholas Winterton). My hon. Friend the Member for Broxbourne persuasively made the case that it was not possible to scrutinise the Bill properly in the time available. Finally, I thank my hon. Friend the Member for Macclesfield. I know there is a convention in the House that Members are not supposed to make speeches or interventions before they make their maiden speech. I am grateful that no such convention applies to Members after they have made their valedictory speech. I had the great pleasure of winding up after my hon. Friend's valedictory speech during the Budget debate, and it was an equally great pleasure to hear him address the Chamber again this evening. This is, we hope, this Government's final Finance Bill. Over the past 13 years our taxation system has developed a reputation for complexity and unpredictability. It has acquired a reputation for stealth taxes and the use of tax policy as a means to lay political traps for opponents rather than as the fairest and most efficient way of raising revenue. The Bill contains elements of all those attributes. The Bill could have taken the minimalist approach and focused only on matters that needed to be addressed urgently. The Chartered Institute of Taxation made that point in a hurried but none the less professional submission, saying that""the challenge to the Government is, quite simply, why any clauses more than those necessary to provide for the continuation of income tax and setting of duty rates should be passed."" It makes the point that a number of technical or practical problems might well be detected, given the limited time available to consider the Bill. My hon. Friend the Member for Fareham (Mr. Hoban) highlighted several aspects of the Bill about which there could be difficulty. For example, clause 24 and its related schedule, which relate to pensions, are particularly complex. Clauses 31 to 33, which relate to charities, also contain numerous complexities, and the Chartered Institute of Taxation states:""as far as we are aware the detail of these proposals has not been consulted on."" My hon. Friend also talked about clause 36, which relates to penalties in respect of offshore income, and might affect the nationals of countries with which we do not have tax information exchange agreements. He also highlighted the position of the Gurkhas who have settled here, and raised the prospect of Joanna Lumley turning her attentions to Treasury Ministers; they may or may not find that an appealing thought. Clause 56 deals with stamp duty land tax and partnerships, and the Chartered Institute of Taxation says:""the clause as drafted will catch many transactions carried out for commercial reasons."" Clause 57 addresses the disclosure of tax avoidance schemes, and the institute says:""we still have concerns about the breadth of the legislation."" It makes the point that given that implementation will not take place until autumn,""it seems bizarre to rush it through in the first Finance Act"." The institute also raised concerns about clause 58, but we have succeeded in arguing that that should be removed from the Bill. In many ways, the Bill introduces greater complexity, yet it is clearly not receiving the scrutiny that such measures normally receive. The situation helpfully supports an argument that Conservative Members have been making for some time: we need to do much more to improve scrutiny. We argue that it is necessary to publish draft legislation at the time of pre-Budget report—in advance of the publication of the Finance Bill—to allow for proper scrutiny, including pre-legislative scrutiny by a parliamentary Committee. We would also establish an office of tax simplification that could advocate reforms to our tax law to make it less complex. We will let these clauses through. Tackling avoidance is a perfectly reasonable intention—we have no difficulty with it—but we make a commitment that we will listen to representations made by professional bodies on the technical and practical implications of the Bill, and if appropriate return to those matters. I hope that the Exchequer Secretary will make a similar commitment. Many aspects of the Bill have not received the necessary pre-legislative scrutiny, and the Bill is clearly not getting the legislative scrutiny that one would expect, so there is a fair chance that it will contain errors that would have been picked up under the normal process. I do not believe for a moment that the normal process is sufficient in itself, but I hope that the hon. Lady will make a commitment that if her Government are re-elected, and if there are representations that deserve a proper response in a second Finance Bill this year, they will, if necessary, make revisions. We are certainly prepared to consult on these technical matters and to consider them further. I have referred to the complexity and unpredictability in the tax system, but let me touch on stealth taxes. I am delighted that we will manage to remove three of those taxes from the Bill. The first is the increase in duty on cider: an increase 10 per cent. above inflation that does not focus on super-strength cider—a focus for which we have long argued—was a regrettable move and we are pleased that we have forced the Government to drop it from the Bill, or at least amend the provision. There will be a clear choice at the general election on whether it is implemented. We have raised concerns about the policy on furnished holiday lettings ever since it was announced in last year's Budget. The proposed change in taxation treatment could affect 45,000 jobs and 60,000 businesses, and have a serious impact on various rural and seaside areas.